I agree. I tried it a number of times in my sep account. Since I trade mainly energy stocks (although that probably is irrelevant), I finally figured out that, by writing calls, I either missed out on a big move, like buying BTU in Feb at $85ish and then sold the 6/90's for what I thought was a very healthy premium; of course, then BTU proceeded to split and run to over $70. By the time June came around, I had watched that run in the middle, and then got excercised at post-split $45; so, I missed the whole run, but made a decent profit, which, did not ease the pain any. Same thing happened with VLO, but in the other direction. I busted my ass selling the calls, buying them back, reselling them, and in the end result I ended out getting stopped out at break even....when, if I had just played the stock, I would have had some control and made some money. I had about a dozen more examples of that this year. Bottom line, I originally figured I could use call writing as a strategy in a retirement account to achieve gains of around 20% per annum, but I feel a lot more comfortable just buying and selling the stock whenever I feel like it, and not be locked in to a call position. Anyway, that's my personal experience on that subject.
Buy an apartment in Dubai - excellent returns and rental yield. No work to do also. 35-40% returns tax free. Thats where the smart money has been heading since 2002
I'll take a shot at this... note that I don't use this "strategy" (using quotes because I'm obviously not well versed in options, in fact I rarely trade options) but, from what I've read and heard this is the idea: Suppose you own a portfolio of stocks, most of which are low volatility/long terms plays and you want to even out your yearly returns. By selling the premiums on something you already own, you produce a constant rate of return without many transactions and with very little risk (since the hold time is long, ideally you only transact the option, not the underlying). YES one does CAP gains, but in return you achieve consistency. That's the tradeoff and if someone wants a consistent, modest rate of return, I can see this strategy being a viable option. Of course there is no easy 15%, we all know that. There are negatives to every strategy, there are negatives to selling naked puts as well, as there are with day-trading, holding overnight, futures, etc etc... there are many ways to achieve a desired result and there are many more ways to get hurt in trying to do so. Just a suggestion. Directional stock trading is obviously the most effective way to a achieve a good return, but, it can be stressful and time consuming. The other end of the spectrum is managed accounts. I mentioned a "strategy" that falls somewhere in the middle, any other suggestions?
Do you? I don't think you got my point at all. I'm saying: When driving from Chicago to NY, don't take a needless detour through Texas. Your reply: I agree- Because NY sucks, and you're better off going to Boston instead. I give up.
I never said it wasn't logical to sell covered calls when you <b>already own the stock</b>. Rather, it isn't logical to deliberately go from flat to covered call (as many people inexplicably do), since you can just <b>sell naked puts</b> to attain the <b>exact same result</b> with lower slippage, lower commissions and lower margin required.
11-30-06 01:05 PM buy with the prayer of a JAPAN rebound.... BUY---- NIS, MTU, HIT, SNE, MC, NMR, KUB, NIPNY, IX, MLEA, TMIC, WACLY, NSANY, DCM, TDK, NTT AND THIS years good ones KYO, KNM, TM, HMC, FUJIY, CAJ This is horrible advice, but I thought it would be funny for old Stock Trader.....Be the Contrarian and play around with thinly traded Japanese ADR's... That's my best guess of a buy and hold strategy for 2007-----I doubt many even thought about something this outside the norm.... It could work and if the dollar begins to show some strength you could get a nice bounce in the Nikkei..... $COSTAverageMAN Not bad advice considering the Nikkei just closed at an 7 yr high If you picked the proper stocks you would have close to your 15%... $COSTAverageMAN
Get a job, any job will do ... you can then decide how much effort you can afford to put in and 'they' will reward you with about 15-20% of it for it. Easy does it.